Tourists are Spending Less —Here’s How Destinations Can Adapt

By on August 08, 2023

Coming out of the COVID-19 pandemic, the global tourism industry has experienced a paradigm shift as tourists are now spending less money during their vacations. On the latest episode of the Destination Marketing Podcast, I discussed this changing tourism landscape with Amir Eylon, President & CEO of Longwoods International, a leading tourism market research company.

In the episode, we discussed how this shift in spending behavior has compelled destinations to rethink their tourism strategies. With visitors becoming more cautious about their travel expenses, destinations need to pivot their approach to attract and retain these tourists. This post will explore the reasons behind this changing trend and propose strategic adjustments that destinations can make to cater to the evolving needs of travelers.

Understanding the Changing Spending Behavior

Economic uncertainties, such as global recessions and geopolitical tensions, have led to an increased focus on budget-conscious travel. Additionally, the rise of social media and online platforms has exposed travelers to a wider variety of affordable options and allowed them to compare prices easily. On top of all of this, the emergence of the conscious consumer has led to a demand for more sustainable and ethical travel experiences, which may come at a higher cost. Deciphering what tourists will spend money on versus what they won’t spend money on is crucial for destinations when planning their future strategy. 

Pivoting Destination Strategies

To successfully address the changing spending behavior of tourists, destinations need to be adaptive and innovative. Here are some key strategies they can employ:

Diversify and Tailor Offerings:

DMOs need to work with industry partners to diversify their offerings to cater to different types of travelers, from budget-conscious backpackers to luxury-seekers. By providing a wide range of experiences and accommodation options, destinations can attract a broader audience. Additionally, some destinations have found success in tailoring packages and experiences to suit specific budget requirements, ensuring that visitors can still enjoy a memorable trip without breaking the bank.

Enhance Digital Presence:

With the significant influence of social media on travel decisions, destinations need to invest in digital marketing and establish a strong online presence. Engaging content, captivating visuals and authentic storytelling can inspire potential tourists and convince them that the destination offers value for money. At my company Relic, we specialize in building a strong online brand by focusing on the power of owned media, such as podcasts, YouTube series and blog posts about or based in your destination.

Collaborate with Local Businesses:

Destinations can foster partnerships with local businesses and entrepreneurs to promote your community. Savings passes, beer passports and interactive programming across multiple partners are great examples of how to drive business to your local shops and attractions, ultimately enhancing the appeal of the destination as a whole. These types of programs allow destinations to incentivize visitors to spend more while exploring the local culture and supporting small businesses.

Improve Infrastructure and Accessibility:

Investing in efficient transportation systems and upgrading infrastructure can enhance the overall travel experience for tourists. By streamlining travel logistics and reducing the cost and time required to move between attractions, destinations can attract more visitors and encourage them to explore additional activities, thus boosting spending. For example, the Salt Lake City Trax system offers free transportation throughout the downtown area in the ‘free fare zone’. This offering gives people an incentive to explore downtown without tiring out on foot or paying for an Uber.

Offer Seasonal and Off-Peak Promotions:

To stimulate tourism during slower periods, destinations can work with partners to encourage seasonal promotions and off-peak discounts. Lower prices during less popular times can attract more visitors and balance out fluctuations in spending throughout the year.

Prioritize Customer Experience:

Enhancing the customer experience is paramount in ensuring tourists’ satisfaction and encouraging repeat visits. Providing exceptional service, personalized recommendations and prompt responses to feedback can create positive memories and encourage tourists to spend more on future trips.

The changing spending behavior of tourists has forced destinations to reevaluate their strategies and adapt to the evolving travel landscape. By diversifying their offerings, embracing sustainable practices, enhancing their digital presence, collaborating with local businesses, improving infrastructure, offering seasonal promotions, and prioritizing customer experience, destinations can effectively cater to the needs and preferences of modern travelers. The key lies in striking a balance between affordability and quality, ensuring that visitors feel they are getting value for their money. As destinations pivot their strategies, they can not only attract more tourists but also foster a sustainable and thriving tourism industry for years to come.